Copyright © 2006 Thomson Delmar Learning All Rights Reserved Selling Hospitality Chapter 3 Creating Mutually Beneficial Value Exchanges

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Marketing Concept The five rights –right product –right price –right place/location –right place/distribution –right promotion

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Marketing Concept The five rights –right product –right price –right place/location –right place/distribution –right promotion advertising promotion public relations personal selling

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Salesperson as Micromarketer The salesperson on a one-on-one or team- on-team basis performs all the functions of traditional marketing focused on organizational buyers with complex needs and high revenue potential.

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Salesperson as Micromarketer The salesperson on a one-on-one or team- on-team basis performs all the functions of traditional marketing focused on organizational buyers with complex needs and high revenue potential. The traditional marketing mix variables serve in a supportive role for the sales team.

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Selling Defined Selling is a social and managerial process by which individuals and groups of individuals obtain what they need, want, and/or desire through creating and exchanging value with other individuals and groups of individuals. (adaptation of Kotler, 1988, p. 3)

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Key Terms/Concepts in Definition Exchange Value Value exchange that satisfies the needs of both the buyer and seller

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Four Ways to Exchange Value 1.Self-production — One can hunt, grow, or make items by oneself. One does not have to interact with anyone else. There is no selling here. 2.Coercion — One can steal or coerce from others. There is no benefit offered to others for what is received. There is no selling here. 3.Begging — One can appeal to others for sense of charity and mercy. There is no tangible benefit to others. There is no selling here. 4.Exchange — One can approach others and offer some resource in exchange for something else of value such as money, another good, or some service. Selling arises from this last approach.

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Exchange is the act of obtaining a desired value from someone by offering something in return. Exchange requires five conditions: There are at least two parties to the exchange. Each party has something that may be of value to the other party. Each party is capable of communication and delivery. Each party is free to accept or reject the offer. Each party believes that it is appropriate or desirable to deal with the other party.

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Value Defined Value = Benefits minus Cost

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Value Defined Value = Benefits minus Cost Value for the buyer  lowest price  differentiation —product exceeds alternative’s quality, features, ease of acquisition

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Value Defined Value = Benefits minus Cost Value for the buyer  lowest price  differentiation —product exceeds alternative’s quality, features, ease of acquisition Value for the seller  long- and short-term economic value  repeat and referral business  market penetration

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Value Defined Value = Benefits minus Cost  Benefits = bundle of benefits; solutions to simple to complex problems  Cost = bundle of costs; money paid, time to acquire, hassle to use

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Customer-Derived Value Formula Customer-delivered value (CDV) equals total customer value (TCV) minus total customer costs (TCC) or for short CDV – TCC = TCV

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Importance of Customer Expectations Product service performance – outcome quality – process quality minus customer expectations equals customer satisfaction or dissatisfaction

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Types of Buyers Intrinsic value buyers see the product as a commodity and place value on the lowest price. They see little value in interacting with a salesperson. Extrinsic value buyers seek solutions to complex problems. Quality product is a foundation for value. They are willing to invest time and effort (costs) with the salesperson in return for advice, customization, and problem-solving capabilities. Strategic value buyers want to create synergies that only partnerships and alliances can provide.

Copyright © 2006 Thomson Delmar Learning All Rights Reserved Three Approaches to Selling Transactional selling Consultative selling Alliance selling The customer’s perception of value should dictate which approach to use.